The reality is that choice in health care may be limited or substantially curtailed in the future. To imply that the U.S. health care system can achieve the needed cost savings without such restrictions is not productive and may be potentially deceptive. Continued unfiltered, unlimited choice will only continue to drive more utilization and costs. Academic health centers (AHCs) should take a leadership role in expanding the public dialogue regarding health care reform and its likely need to limit choice at some level while preparing for the inevitable related evolution of AHCs’ core clinical programs, relationships, and strategies.
Dr. Karpf is executive vice president for health care affairs, University of Kentucky, Lexington, Kentucky.
Dr. Lofgren is vice president for health care operations, University of Kentucky, Lexington, Kentucky.
Correspondence should be addressed to Dr. Karpf, University of Kentucky, 900 S. Limestone St., Charles T. Wethington Building, 317, Lexington, KY 40536; e-mail: email@example.com.
During their 2008 presidential campaigns, both Barack Obama and John McCain repeatedly committed to choice in health care. “No one will get between you and your doctor” became a central theme for both parties. Now that health care reform has been passed, the issue of choice may not be as simple and straightforward as originally portrayed. Choice, at the broadest level, means picking from a menu of health plans and carriers. At the next level, choice relates to picking a particular physician, and at the most fundamental level it relates to choice of various types of diagnostic and therapeutic approaches. However, unrestricted choice without clinical or financial constraints tends to increase utilization and costs. The reality is that choice may be limited or substantially curtailed in the future. For such a change to be successful, the concept of choice and the extent of choice must be clearly discussed and clarified in the public domain. If limitations are not explicitly understood, significant public frustration may ensue, thereby jeopardizing and potentially scuttling health care reform. Academic health centers (AHCs) must understand and prepare for limited choice. The implications for them are significant.
Why Choice Must Become More Limited
The recently passed health care legislation is essentially insurance reform extending and mandating coverage to an additional 30 to 35 million Americans. It appears that individuals acquiring insurance through state exchanges will have choices among several different packages varying in coverage, cost, and magnitude of deductibles and co-pays.1 This choice of plan should be preserved.
In an effort to reduce unnecessary utilization, an increasing number of health plans require the individual to bear some of the direct costs for services.2 Many of the newly insured may be surprised and disappointed with their personal total costs for their health care. Individuals who opt for less expensive plans with high co-pays and high deductibles may find routine care still unaffordable. Equally concerning is that many employers may simply stop offering health insurance and require their employees to secure individual health insurance policies.3
The only interventions that have been shown to control or reduce the cost of health care involve some type of restrictions.4 These restrictions can come in many forms such as limited choice of providers, need to adhere to established guidelines or prevailing best practices, high-deductible plans, or various forms of managed care.5 If we are going to bend the cost curve, then we will see the emergence of plans and programs that will place some restrictions on patients. As seen in other developed countries, completely unrestricted choice (which is traditionally favored by most Americans) and a fee-for-service reimbursement model will both increasingly become privileges limited to the wealthiest citizens. Changes in the reimbursement model will be the true catalyst for change in the health care delivery system, including change in the degree of restriction on choice. New reimbursement models are already emerging in the marketplace independent of any legislative initiative or mandate. This new reality needs to be openly and honestly acknowledged.
The Centers for Medicare and Medicaid Services (CMS) has been experimenting with a graduated series of payment reforms designed to force greater integration and accountability. Pay for performance and refusal to pay for unnecessary readmissions are only the opening gambits.6 Experimenting with gain-sharing models is a more direct attempt to encourage providers to work together. CMS’s Acute Care Episode Demonstration Project, which bundles physician and facility fees for a variety of cardiac and orthopedic procedures, clearly motivates physicians and hospitals to generate efficiencies and savings.7 Bundled payments for various episodes of care to promote integration and efficiency are likely to evolve.8 CMS now has substantial experience with the Physician Group Practice Administration Project, which encourages accountable health care organizations to take responsibility for the entire continuum.9 In effect, these forms of reimbursements models are tantamount to a form of partial capitation.
In fact, the dreaded “C” word—capitation—has reemerged from hiding. Massachusetts is struggling with overwhelming increases in state health care expenditures and attendant state budget deficits because of its expanded coverage resulting from reform efforts. A blue-ribbon panel charged with bringing expenditures under control has concluded that the only way costs will be managed is through full capitation. In our opinion, the discussion about “vouchers” by Representative Paul Ryan10 appears to be a Trojan horse to economically move individuals to traditional capitation programs.
Changes in the financial models of health care coverage encourage fundamental change in the health care system to eliminate non-value-added expenditures and inherent inefficiencies. This emphasis to improve quality and efficiency has several common elements: (1) focusing on value—to pay for all care that has been shown to make a difference, (2) eliminating unnecessary variation by adhering to standards of care, (3) widely deploying information technology to provide more information at the point of service for the system, physician, and patients and their families, leading to better decisions and reducing redundancies, and (4) ensuring more comprehensive, compassionate, and integrated care by elevating the roles and responsibilities of primary care physicians and providers.11 To eliminate unnecessary and ineffective care will require the development and deployment of standards of care based on scientific evidence and/or consensus among clinical experts. CMS has recently created the Patient-Centered Outcomes Research Institute to develop and codify such guidelines.12 However, health plans that require adherence to such standards of care will undoubtedly be perceived as limiting the choice of diagnostic and therapeutic options for individuals.
Health care providers that participate in gain-sharing or capitation programs will likely need to use restricted panels of physicians and hospitals. This very much looks like a variant of managed care regardless of its name. When an individual signs up for one of these products, he or she will not have total free access to physicians or facilities. Discussion concerning the limitation of choice of providers is already creeping into public debate. A recent front page article13 in the New York Times notes that insurance companies think they can decrease the cost of care substantially by reverting to the use of restricted panels—a tactic used during the peak of the managed care era of the 1990s.
Managed care organizations in the late 1990s were severely damaged and hampered when individuals who had signed up for these programs sued for health care choices that were not covered because they were deemed as being unproven or experimental.14 If we are to bring health care costs under control, this experience cannot be repeated. Tort reform will have to protect physicians who appropriately limit choices.
Ethical and end-of-life issues will also have to be publicly debated. Discussions about end-of-life and futile care cannot be denigrated into discussions about “death squads.”15
Discussions about choice must become explicit, focused, and fully understood. If not, there will be disappointment, negative reactions, and, ultimately, damage to the change process. Let us make sure that people understand what has been promised to them, what they can expect, and what will likely happen.
Implications for AHCs
As mentioned earlier, if the health care delivery model evolves as we anticipate, there are significant implications for AHCs.
First, AHCs are inherently more costly than community hospitals. AHCs may find themselves excluded from some restricted panels of providers for nonunique services such as joint replacements, invasive cardiology, and even coronary bypass surgery because these procedures can often be done more cost-effectively at community facilities. Being excluded for some routine care not only has financial implications but also raises training concerns.
Second, given the emphasis by CMS on accountable care organizations (ACOs), some AHCs may try to support their patient base by establishing their own accountable health care organizations. Based on the experience in the 1990s, many AHCs were not particularly adept at tightly managing populations of patients. Very large accountable health care organizations will generate substantial amounts of primary and secondary care but only limited amounts of tertiary care.16
Third, those AHCs that strive to become or remain quaternary facilities that provide unique services will need to be members of multiple ACOs and delivery systems. It is unlikely that an AHC will be able to develop a health maintenance organization (HMO) or ACO that spans the millions of individuals necessary to generate significant enough volumes of liver, heart, lung, or bone marrow transplants and complex neurosurgical cases to meet threshold numbers to support appropriate infrastructure. Consequently, most AHCs will likely need to service and coordinate with multiple ACOs and HMOs and become vendors on a truly regional or national basis.
A system of care that is more affordable and more accessible for our citizens will require some type(s) of restrictions or limitation of choice. The current proposed experiments to change the reimbursement models will involve or impose some restrictions. To imply that we can achieve the needed cost savings without such restrictions is not productive and may be potentially deceptive. Continued unfiltered, unlimited choice will only continue to drive more utilization and costs. AHCs should take a leadership role in expanding the public dialogue regarding health care reform and its likely need to limit choice at some level while preparing for the inevitable evolution of our core clinical programs, relationships, and strategies.
Other disclosures: None.
Ethical approval: Not applicable.
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